Hi all. I have a client who sold his bread truck route last year. The route has been amortized for a few years since he purchased it. No other assets are being sold, just the intangible route.

When I list the disposition in the depreciation worksheet, it carries to 4797 Part III. The depreciated portion then carries to Schedule 1 and taxed as ordinary income, and the rest of the gains carry to Sch D, Line 11.

A CPA friend of mine tells me, though, that this type of intagible asset is not required to go on Part III of 4797. He says it goes on Part I, and therefor the entire amount of gains plus depreciated portion all flows to Sch D as long term capital gains, a significant savings to the client. I can't find anything to support his position though.

How should this sale be treated? Any help is appreciated